Fluor Reports Fourth Quarter and Full Year 2017 Results

02/20/18

2017 New Awards of $12.6 Billion; Ending Backlog of $31 Billion

2018 Guidance of $3.10 to $3.50 Per Diluted Share

IRVING, Texas--(BUSINESS WIRE)--Feb. 20, 2018--
Fluor
Corporation (NYSE: FLR) today announced financial results for its
fiscal year ended December 31, 2017. Including the impact of recently
enacted U.S. tax reform legislation, earnings attributable to Fluor in
2017 were $191 million, or $1.36 per diluted share. Excluding these
one-time tax effects of $37 million, or $0.27 per diluted share,
earnings attributable to Fluor were $228 million or $1.63 per diluted
share. This compared to 2016 earnings of $281 million, or $2.00 per
diluted share. Consolidated segment profit for the year was $545
million, compared to $744 million a year ago. Revenue of $19.5 billion
in 2017 compares to $19.0 billion in the prior year. Full year new
awards were $12.6 billion, including $5.4 billion in Energy, Chemicals &
Mining, $2.6 billion in Industrial, Infrastructure & Power, $2.6 billion
in Government and $2.0 billion in Diversified Services. Consolidated
backlog at year-end was $31 billion.

"Over the past year, we continued strengthening our integrated solutions
offering, maintaining a cost-efficient organization and developing
predictive analytics and other tools to enhance our project execution
capability," said David Seaton, Fluor chairman and chief executive
officer. "As we go into 2018, these actions should serve us well with
clients across the diverse markets we serve expressing increased
optimism in pursuing advantaged projects."

Corporate G&A expense for 2017 was $192 million, compared with $191
million a year ago. Expenses for the year were impacted by foreign
currency exchange losses. Fluor’s cash and marketable securities at the
end of the year was $2.1 billion. During 2017, the company generated
$602 million in cash flow from operating activities and paid out
$118 million in dividends.

Fourth Quarter Results

Earnings for the fourth quarter of 2017 were $60 million, or $0.43 per
diluted share. Excluding the tax effects of $37 million, or $0.27 per
diluted share, the company’s net profit was $97 million, or $0.70 per
diluted share. Results for the quarter include an after-tax charge of
$45 million, or $0.32 per diluted share, for estimated cost increases on
a downstream project and a power project. Earnings for the fourth
quarter of 2016 were $70 million, or $0.50 per diluted share. Segment
profit for the fourth quarter of 2017 was $194 million, down from $249
million a year ago. Corporate G&A expenses in the fourth quarter of 2017
were $54 million, compared with $56 million a year ago. Revenue for the
quarter was $5.0 billion and new awards were $3.2 billion.

Outlook

For 2018, the Company is establishing its initial EPS guidance at a
range of $3.10 to $3.50 per diluted share. Guidance for 2018 assumes an
increase in oil and gas, mining and infrastructure opportunities, and
reflects the new revenue recognition standard and our current
interpretation of recently enacted tax reform legislation in the United
States. Based on our current interpretation and analysis, we expect the
benefit of the new revenue recognition standard and U.S. tax reform will
be approximately $0.75 to $0.95 per diluted share, a majority of which
can be attributed to the new revenue recognition standard.

Business Segments

Fluor’s Energy, Chemicals & Mining segment reported segment profit of
$455 million, compared to a segment profit of $401 million in 2016.
Results for the year include a $44 million revision related to estimated
cost increases on a downstream project. Revenue for 2017 was $9.4
billion, down from $9.8 billion in the previous year, primarily due to
the completion of certain chemicals projects. Full year new awards in
2017 totaled $5.4 billion, compared to $8.4 billion in 2016. In the
fourth quarter, the segment booked new awards of $1.1 billion, including
an offshore project in the North Sea. Ending backlog was $17.0 billion
compared to $21.8 billion a year ago.

The Industrial, Infrastructure & Power segment reported segment loss of
$171 million, compared to segment profit of $136 million in 2016.
Segment profit for 2017 included charges of $260 million related to
estimated cost increases on three power projects. Revenue for 2017
increased to $4.4 billion from $4.1 billion a year ago. New awards in
2017 totaled $2.6 billion compared to $6.2 billion in 2016. New awards
in the fourth quarter were $483 million including a contract for the
Greenline light-rail extension project in Massachusetts. Year-end
backlog was $7.7 billion, compared to $15.1 billion a year ago. Ending
backlog reflects the removal of two nuclear power plant projects.

The Government group reported segment profit of $128 million, up 50
percent from $85 million a year ago. Revenue for 2017 was $3.2 billion,
compared to $2.7 billion a year ago. New awards totaled $2.6 billion for
the year, compared to $4.6 billion in 2016. Fourth quarter 2017 new
awards were $1.1 billion including two task order awards with the U.S.
Army Corps of Engineers to restore power in Puerto Rico. Ending backlog
was $3.8 billion, compared to $5.2 billion a year ago.

The Diversified Services segment reported segment profit of $134 million
in 2017, compared to $122 million a year ago. Revenue for the year was
$2.5 billion, even with a year ago. Full year new awards in 2017 totaled
$2.0 billion compared to $1.8 billion in 2016. New awards in the fourth
quarter were $568 million and ending backlog was $2.5 billion, compared
to $2.9 billion a year ago.

Fourth Quarter and Year-End Conference Call

Fluor will host a conference call at 5:30 p.m. Eastern time on Tuesday,
February 20, which will be webcast live on the Internet and can be
accessed by logging onto http://investor.fluor.com.
A supplemental slide presentation will be available shortly before the
call begins. The webcast and presentation will be archived for 30 days
following the call.

Non-GAAP Financial Measures

This press release contains a discussion of consolidated segment profit
that would be deemed a non-GAAP financial measure under SEC rules.
Segment profit is calculated as revenue less cost of revenue and
earnings attributable to noncontrolling interests excluding: corporate
general and administrative expense; interest expense; interest income;
domestic and foreign income taxes; and other non-operating income and
expense items. The company believes that consolidated segment profit
provides a meaningful perspective on its business results as it is the
aggregation of individual segment profit measures that the company
utilizes to evaluate and manage its business performance. A
reconciliation of this measure to earnings (loss) before taxes is
included in the press release tables. In addition, this press release
contains a discussion of earnings and diluted earnings per share,
excluding the effects of recently enacted tax reform legislation, that
would be deemed non-GAAP financial measures. The company believes the
exclusion of the tax impact allows investors to evaluate the company’s
ongoing earnings and to make meaningful period-over-period comparisons.

About Fluor Corporation

Fluor
Corporation (NYSE: FLR) is a global engineering, procurement,
fabrication, construction and maintenance company that designs, builds
and maintains capital-efficient facilities for its clients on six
continents. For more than a century, Fluor has served its clients by
delivering innovative and integrated solutions across the globe. With
headquarters in Irving, Texas, Fluor ranks 149 on the FORTUNE 500
list with revenue of $19.5 billion in 2017 and has more than 56,000
employees worldwide. For more information, please visit www.fluor.com
or follow Fluor on social media at Twitter,
LinkedIn
and YouTube.

Forward-Looking Statements: This
release may contain forward-looking statements (including without
limitation statements to the effect that the Company or its management
"believes," "expects," is “positioned” or other similar expressions).
These forward-looking statements, including statements relating to
future growth, backlog, earnings and the outlook for the Company’s
business are based on current management expectations and involve risks
and uncertainties. Actual results may differ materially as a result of a
number of factors, including, among other things, the cyclical nature of
many of the markets the Company serves, including the Company’s Energy,
Chemicals & Miningsegment; the Company's failure to receive
new contract awards; the Company’s failure to meet cost and schedule
estimates; cost overruns, project delays or other problems arising from
project execution activities; intense competition in the industries in
which we operate; failure of our joint venture or other partners,
suppliers or subcontractors to perform their obligations; failure to
obtain favorable results in existing or future litigation or dispute
resolution proceedings or claims; cyber-security breaches; foreign
economic and political uncertainties; client cancellations of, or scope
adjustments to, existing contracts;client delays or defaults in
making payments;risks or uncertainties associated with events
outside of our control, including weather conditions; the Company’s
failure, or the failure of our agents or partners, to comply with laws;
the potential impact of certain tax matters; possible information
technology interruptions or inability to protect intellectual property;
new or changing legal requirements, including those relating to
environmental, health and safety matters; liabilities associated with
the performance of nuclear services; foreign currency risks; the
availability of credit and restrictions imposed by credit facilities,
both for the Company and our clients, suppliers, subcontractors or other
partners; failure to maintain safe worksites and international security
risks; the inability to hire and retain qualified personnel; possible
limitations on bonding or letter of credit capacity; risks or
uncertainties associated with acquisitions, dispositions and
investments; risks arising from the inability to successfully integrate
acquired businesses; the use of estimates and assumptions in preparing
our financial statements; and the Company’s ability to secure
appropriate insurance. Caution must be exercised in relying on these and
other forward-looking statements. Due to known and unknown risks, the
Company’s results may differ materially from its expectations and
projections.

Additional information concerning these and other factors can be
found in the Company's public periodic filings with the Securities and
Exchange Commission, including the discussion under the heading "Item
1A. Risk Factors" in the Company's Form 10-K filed on February 20, 2018.
Such filings are available either publicly or upon request from Fluor's
Investor Relations Department: (469) 398-7070. The Company disclaims any
intent or obligation other than as required by law to update its
forward-looking statements in light of new information or future events.

FLUOR CORPORATION

CONSOLIDATED FINANCIAL RESULTS

(in millions, except per share amounts)

Unaudited

CONSOLIDATED OPERATING RESULTS

THREE MONTHS ENDED DECEMBER 31

2017

2016

Revenue

$

5,027.4

$

4,989.6

Cost and expenses:

Cost of revenue

4,812.4

4,740.5

Corporate general and administrative expense

54.0

56.2

Interest expense, net

9.5

14.2

Total cost and expenses

4,875.9

4,810.9

Earnings before taxes

151.5

178.7

Income tax expense

70.7

107.7

Net earnings

80.8

71.0

Less: Net earnings attributable to noncontrolling interests

20.5

0.5

Net earnings attributable to Fluor Corporation

$

60.3

$

70.5

Basic earnings per share

Net earnings

$

0.43

$

0.51

Weighted average shares

139.9

139.3

Diluted earnings per share

Net earnings

$

0.43

$

0.50

Weighted average shares

141.0

141.1

New awards

$

3,234.5

$

2,824.5

Backlog

$

30,915.4

$

45,011.9

Work performed

$

4,903.6

$

4,881.5

FLUOR CORPORATION

CONSOLIDATED FINANCIAL RESULTS

(in millions, except per share amounts)

Unaudited

CONSOLIDATED OPERATING RESULTS

YEAR ENDED DECEMBER 31

2017

2016

Revenue

$

19,521.0

$

19,036.5

Cost and expenses:

Cost of revenue

18,902.5

18,246.2

Corporate general and administrative expense

192.2

191.1

Interest expense, net

39.9

52.6

Total cost and expenses

19,134.6

18,489.9

Earnings before taxes

386.4

546.6

Income tax expense

121.9

219.2

Net earnings

264.5

327.4

Less: Net earnings attributable to noncontrolling interests

73.1

46.0

Net earnings attributable to Fluor Corporation

$

191.4

$

281.4

Basic earnings per share

Net earnings

$

1.37

$

2.02

Weighted average shares

139.8

139.2

Diluted earnings per share

Net earnings

$

1.36

$

2.00

Weighted average shares

140.9

140.9

New awards

$

12,565.6

$

20,959.2

Backlog

$

30,915.4

$

45,011.9

Work performed

$

19,065.9

$

18,612.2

FLUOR CORPORATION

Unaudited

BUSINESS SEGMENT FINANCIAL REVIEW AND U.S. GAAP RECONCILIATION

($ in millions)

THREE MONTHS ENDED DECEMBER 31

2017

2016

Revenue

Energy, Chemicals & Mining

$

2,357.7

$

2,509.1

Industrial, Infrastructure & Power

1,002.9

1,122.9

Government

957.3

694.9

Diversified Services

709.5

662.7

Total revenue

$

5,027.4

$

4,989.6

Segment profit (loss) $ and margin % (2)

Energy, Chemicals & Mining

$

135.5

5.7

%

$

153.7

6.1

%

Industrial, Infrastructure & Power (1)

(29.3

)

(2.9

)%

44.1

3.9

%

Government

49.0

5.1

%

19.6

2.8

%

Diversified Services

39.3

5.5

%

31.2

4.7

%

Total segment profit $ and margin %

$

194.5

3.9

%

$

248.6

5.0

%

Corporate general and administrative expense

(54.0

)

(56.2

)

Interest expense, net

(9.5

)

(14.2

)

Earnings attributable to noncontrolling interests

20.5

0.5

Earnings before taxes

$

151.5

$

178.7

YEAR ENDED DECEMBER 31

2017

2016

Revenue

Energy, Chemicals & Mining

$

9,376.7

$

9,754.2

Industrial, Infrastructure & Power

4,367.5

4,094.5

Government

3,232.7

2,720.0

Diversified Services

2,544.1

2,467.8

Total revenue

$

19,521.0

$

19,036.5

Segment profit (loss) $ and margin % (2)

Energy, Chemicals & Mining

$

454.7

4.8

%

$

401.5

4.1

%

Industrial, Infrastructure & Power (1)

(170.8

)

(3.9

)%

135.8

3.3

%

Government

127.9

4.0

%

85.1

3.1

%

Diversified Services

133.6

5.3

%

121.9

4.9

%

Total segment profit $ and margin %

$

545.4

2.8

%

$

744.3

3.9

%

Corporate general and administrative expense

(192.2

)

(191.1

)

Interest expense, net

(39.9

)

(52.6

)

Earnings attributable to noncontrolling interests

73.1

46.0

Earnings before taxes

$

386.4

$

546.6

(1) Includes research and development expenses associated with NuScale
totaling $22 million for both the three months ended December 31, 2017
and 2016, and $76 million and $92 million for the years ended December
31, 2017 and 2016, respectively.